CN: Partnership with Google Cloud ups ante for integrating technology

Earlier this month, Canadian railway CN announced that it would be working with Google Cloud via a seven-year partnership aimed at catapulting CN’s current technological efforts into what CN calls “digital scheduled railroading” (DSR), or the next stage following precision scheduled railroading.

CN (NYSE: CNI) says DSR will modernize the railway’s technology infrastructure in the cloud and provide customers with improved visibility into the supply chain. CN will work with Google Cloud to develop an intuitive digital platform powered by Google Cloud’s AI and machine learning tools so that customers will have more visibility for planning, shipping, tracking and payment of services, according to a Dec. 14 release. 

CN will also seek to move most of its digital infrastructure to Google Cloud to “scale with customer and industry demands, simplify the company’s IT estate, create efficiencies, and reduce product delivery lead times,” CN said.

FreightWaves recently chatted with Dominique Malenfant, CN chief information and technology officer, and Mohit Bhat, CN vice president of customer solutions and innovation, about this initiative. This question-and-answer interview was edited for length and clarity.

FREIGHTWAVES: Why is this partnership with Google Cloud significant?

MALENFANT: “This partnership is truly central to our strategic plan announced in September because it’s reinforced our commitment to develop the railway of the future … .

“We’re very pleased that with Google, we will have a key partner on innovation, and it will help us to develop a product and platform that will ease the way of doing business. It will expedite our efficiency so we can reduce, delay and improve the overall service for our customer. You may remember, about 20 years ago, CN introduced a new way of operating the railroad in North America. It’s named precision scheduled railroading, or PSR. Now, most of the Class Is are following that model.

“We felt that now it’s time to bring it to that next level. And the next level for us means technology and digital technology, which will significantly help operational efficiency. 

“And more importantly, on the customer side — the customer interface at the moment in the rail industry is not as user friendly as it could be compared with the trucking industry. It’s a big gap we want to close so we can accelerate that growth. So, more concretely, we’re going to develop with Google an intuitive platform, a very intuitive digital platform, that will be leveraging Google capability and artificial intelligence and machine learning. It will provide enhanced visibility for the customer so that the customer can have a better experience overall. And it will connect the various partners that we have in the supply chain ecosystem to give them quick, data-driven decisions — helping them to make the right decisions that are based on data.”

BHAT: “In addition to what Dominic just mentioned, it’s a partnership of two organizations coming together to transform some core elements of the work we do in-house and how we work with our customers, partners, ops [operations], sales and marketing functions.

“We are setting up the foundations of data-driven modernization, data-driven transformation, by bringing all legs of the supply chain together and having a closed-loop communication with our customers … . We want to bring a seamless experience similar to what you as a consumer would get when you get a ride from an Uber on an Uber platform or a Lyft platform or how you get your goods on your Amazon platform. 

“We want to bring the platform notion to the B2B industry that we are part of and provide that seamless experience covering all legs of the supply chain and giving that end-to-end visibility and view by closing the loop as well. Because what happens today is, we do have parts of the supply chain visibility we offer to our customers, but it sometimes becomes complex to close the loop because of the legs of the supply chain that we are dealing with. We will work with Google to bring that closed-loop visibility through to a platform-based ecosystem . …

“We are also going to work with them to bring elements of forward-looking technology design, forward-looking thinking, cloud- and platform based-technology, foundations, training for employees. That becomes a key foundational element and underpinning in setting the foundations of DSR and implementing those foundations and making them a reality in the industry as well. And there are a number of areas where we will co-create and co-innovate on some solutions, bringing the best of Google’s AI and Google’s operational research capability. And we will bring those capabilities from a network-of-network design that Google operates in from a fiber and a data center standpoint, and bring those concepts of network optimizations into the CN ecosystem, because we are a network-of-network business as well.”

FREIGHTWAVES: What is a closed-loop system?

BHAT: “What it means is we will offer an omnichannel digital experience to our customers, whether they are coming in from a sales channel or a new order or customer service channels. We want to bring that seamless experience for our customers and partners by having that one-platform shop for them to enter into the CN ecosystem. It’s something similar to what I’m sure you are used to, when you go to your shipping experiences with the 3PLs, 4PLs, or you go to your banking experiences and you have an omnichannel experience and you are context switching from one channel to the other. We want to focus on having that seamless experience and a context transfer from one channel to the other as well.”

FREIGHTWAVES: Is the purpose of this initiative primarily to provide supply chain visibility, or are there other purposes? 

MALENFANT: “Think about the complete process of ordering: placing an order, tracking where your shipment is, billing after that and paying the shipment. The overall platform will be compressing all these processes from the beginning to the end. 

“And also, when we talk about DSR, we’re talking about improving efficiency as well. You know, rail-sorting cars in the yard and putting them in the right sequence — to do that for the next move and so on is a complex task. There is a lot of movement involved. So, imagine what artificial intelligence can do. That’s where Google will bring value, by providing a capability to optimize those complex problems and finding a simple solution to those complex problems. That can ease and smooth the process and [provide] gains in velocity, gains in efficiency.

“At the yard terminal, you have all those containers that you need to reorder [and reconfigure] to ship to the next customer. All that will also be leveraging AI and machine learning … .”

FREIGHTWAVES: How will this partnership build upon the existing technological tools that CN already uses?

MALENFANT: “There are multiple parts to that. To that part, I will say the first one is, with the help of Google … [to] modernize or mature and move a good part of the current workload we have to the cloud … .

“Moving to the cloud will help us to optimize our cost, optimize our speed and time to market, and will enable new tools for us to be more efficient. So, that’s going to be adding a significant impact to our profitability and our efficiency as an organization. So, that’s the first prong of the partnership. The second prong is truly leveraging Google Cloud and also the complete family of [Google parent company] Alphabet to help us to find solutions … .

“That’s where we see the partnership. It’s helping us internally to transform and be more efficient and more cost effective and better equipped, and at the same time, help us to develop for our customers more efficient operations and new customer experiences. …

“It’s truly central for CN to become the railway of the future. We were innovating 20 years ago by pushing PSR, and everybody has followed after that. But now for us, the DSR — the digital scheduled railroading — is truly the vision of the future.”

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Editor: Joanna Marsh